Securitization based on reverse mortgage in financial markets

Abstract

This study examines whether returns can be obtained when the securitization process is applied to the reverse mortgage system. To simulate future interest rate forecasts for reverse mortgages in the United States, data for the period 2012-2022 was obtained from "investing.com," Moody's, the Federal Reserve Bank (FED), and the World Bank databases. Using the Matlab software package, various combinations of input variables affecting the asset pool of reverse mortgages were simulated using the Monte Carlo Simulation method. This allowed for the estimation of the minimum and maximum values of future returns, total interest expenses, and total interest amounts to be distributed. The findings of the study suggest that returns are obtained when securitization is applied to the reverse mortgage system. Additionally, the Monte Carlo Simulation method is deemed useful for evaluating the asset pool of reverse mortgages, and it is believed that securitization can significantly contribute to the economy by converting the assets involved in the implementation of reverse mortgages into liquid assets.